Lesniak Calls on Congress to Protect Homeowners and the Economy

Our financial markets are floundering and homeowners are losing, or are in fear of losing, their homes. Both are interconnected and driving down our entire economy -- and decimating the value of the dollar -- deeper and deeper with no end in sight.

President Bush's solution to the foreclosure crisis is woefully insufficient and will not resolve the problem.

The solution I am suggesting is not complex, nor difficult: double the income tax deduction for mortgage interest, tailor it for lower and middle incomes by capping the amount of income eligible for the increased deduction, and allow it for those who do not itemize their deductions.

These tax incentives will provide relief to the average homeowner and, in turn, will increase consumer spending.

For example, a household with a $200,000 mortgage and roughly $1,200 interest payments per month could deduct $14,400 in interest annually. By doubling the interest deduction, that amount would increase to $28,800. Assuming, the household is in the 30% tax bracket, their tax saving would be $4,200.

This solution will help stop the decline in home prices, set the stage for an increase in home values, help more individuals qualify for new mortgages by incentivizing the purchase of housing, create demand for the construction of new homes, and normalize foreclosure levels. It also addresses the needs of renters and low-income families because the double-deduction will increase their eligibility for new loans and free-up more cash for home purchases.

Sure, doubling the income tax deduction for mortgage interest will cost our Treasury and increase our deficit, but the economic growth it will create will lessen its fiscal impact. It will save our banking and insurance institutions, help the average homeowner, and stabilize our economy. The well being it will generate will be immediate and priceless.

And it will cost less than the War in Iraq and won't take 100 years to truly declare "Mission Accomplished."

Will we be rewarding bad decisions by both homeowners and financial institutions? Sure. And why don't we cut our nose off to spite our face while we're at it?